Media put committee through spin cycle on audience reach

Date: March 19 2013

Elizabeth Knight

The average citizen of, say, Wagga Wagga, would give a very different answer to the question of whether large metropolitan networks should be able to buy their regional counterparts than would the US hedge funds that own a large chunk of the Nine Network.

But make no mistake, for those media groups providing evidence before the joint parliamentary committee in Canberra, their views reflect their financial positions ahead of any ideological stance or community concerns.

The nation's capital was awash with media moguls on Monday, arguing their cases about whether mergers were good or bad.

Their spin on whether 75 per cent audience-reach rules should be relaxed was centred on the needs of regional Australians, their access to local news and the concept of media diversity. That was the rhetoric.

One national network operator, Nine, is gasping to get the 75 per cent reach rules relaxed because it has plans to merge with a regional operator, Southern Cross.

Nine boss David Gyngell says he is passionate about giving the folk of Wagga a better home-grown news service and will employ a bigger local journalist team to achieve it.

What Gyngell really wants is to merge with Southern Cross and weave some financial magic to increase the profit from the combined group. Some of this may be funnelled back into better regional programming.

Whether this works better for Southern Cross shareholders or Nine's owners is a separate issue. The market can't make an informed judgment on who's shareholders might benefit because we don't know the details of how any spoils may be divided. But there will be a relative winner and a relative loser.

Ten, the third-ranking national network and currently affiliated with Southern Cross, is strident in its argument against allowing the metro networks to acquire regional operators.

This makes sense for Ten because it doesn't have the money to buy a regional network, nor does it have the ratings appeal to attract a regional partner.

Its chief executive, Hamish McLennan, justified the company's disdain for audience-reach relaxation saying the point of the mergers would be to rip out costs and that claims (by Nine) that it would be able to spend upwards of $15 million to grow news rooms around regional Australia defied commercial reality.

Seven, controlled by Kerry Stokes, seems to be taking a bet each way. He believes the changes should not be rushed through.

His motivation has little to do with looking after the people in the bush. Of course, he won't say this, but he will ascribe a purely financial agenda to the owners of Nine Network.

''Now, there may well be good reasons to merge various media groups to get more [efficiency], but I can promise there isn't any way two hedge funds in New York [the biggest shareholders in Nine] and Macquarie Bank [the biggest shareholder in Southern Cross] are going to merge things to give you more news services,'' Stokes said.

He is right about that.

As for Southern Cross, loosening the ownership rules is a great idea, because it is engaged in merger discussions with Nine.

Prime Media, which owns the Seven regional affiliate, agrees. This is because it recognises that it becomes a takeover target, and that is great for its share price.